Hong Kong home sales got off to a strong start over the New Year as secondary market deals increased to a seven-week high for the period December 27 to January 2.

Data compiled by Midland Realty show there were 237 transactions recorded at 35 major housing estates during the week - up 14.5 per cent on the previous week and the highest number of deals done in the past seven weeks.

A similar picture emerged in data collated by Ricacorp Properties from transactions reported in 50 selected housing estates. The data show there were 431 deals done in the larger sample from December 27 to January 2, up 14 per cent on the previous week.

Agents said owner-occupier buyers were gradually returning to the market, while long-term investors were showing renewed interest because of sustained low interest rates.

Sales in the secondary market in the 35 major housing estates had plunged 80 per cent to 80 deals in the week from November 22 to 28 following the announcement by the government of tough measures to increase buying costs and tighten mortgage lending, according to a study by Midland Realty.

On November 19 the government announced an increase in stamp duty on homes resold within two years. The stamp duty was set as high as 15 per cent if a home was resold within six months.

At the same time, the Monetary Authority reduced the amount banks could lend to buyers of homes worth HK$12 million or more from 60 per cent to 50 per cent of the price. The maximum mortgage ratio for HK$8 million and HK$12 million properties was cut from 70 to 60 per cent.

Kevin Ng, sales manager of the Kowloon Station branch of property agent Century 21, said long-term investors in sound financial health were still confident about the outlook for the market.

Ng cited as an example the recent sale of a 2,070 sq ft flat at the Cullinan. The sale price of HK$54 million was the highest recorded at the Cullinan in the past two months, he said.

In the primary market, meanwhile, Cheuk Nang, a small developer owned by Cecil Chao Sze-tsung, is selling its eight-year-old Villa Cecil II rental development in Pok Fu Lam early next month. Agents said four potential buyers had expressed interest since the company announced the sale on December 27.

The 16 flats in the project - all currently on rental contracts - range from 2,748 sq ft to 4,106 sq ft. They are expected to fetch between HK$11,599 and HK$17,329 per sq ft and Cheuk Nang will guarantee buyers a rental return of at least 3 per cent.

David Chan, sales director of Ricacorp Properties, said he anticipated an increase in sales volumes this month as buyer confidence appeared to be on the rise.

However, in the absence of short-term investors or speculators and a lack of primary launches by developers, Midland Realty said sales volume would not return to the levels reached in October - at the peak of last year's deal numbers.

Lee Wee Liat, regional property head of Samsung Securities (Asia), echoed this view. In his latest research report Lee said the special stamp duty was likely to reduce speculative demand and ensure that secondary transactions would not reach the levels seen before the announcement of the measures in November.